Samaiden Group Bhd’s (Samaiden) 1QFY24 results disappointed due to weak progress billings from engineering, procurement, construction and commissioning (EPCC) jobs.
Therefore, Kenanga Research in its Results Note today (Nov 29), said it cuts Samaiden’s earnings forecast by 16% to reflect weaker progress billings but keep its FY25F numbers.
Consequently, the research house maintains its OUTPERFORM call also cuts its TP by 20% to RM1.44, from RM1.80 based on 30x fully-diluted FY25F EPS of 4.8 sen.
“This is in line with the average forward PER of peers such as Solar Vest Holdings Bhd (Not Rated) and Sunview Group Bhd (Not Rated). Our TP imputes a 5% premium given its 4-star ESG rating as appraised by us,” it said.
Kenanga said the group’s 1QFY24 core net profit of RM3 million disappointed, coming in at only 16% and 14% of our full-year forecast and the full-year consensus estimate, respectively.
“The variance against our forecast came largely from weaker-than-expected progress billings from EPCC jobs. Its 1QFY24 core net profit rose 21% YoY driven by Large Scale Solar (LSS) jobs and lower solar penal prices.
This is at the back of its 1QFY24 revenue, which rose 13% driven largely by EPCC jobs for LSS projects (which have an end-CY23 completion deadline), Kenanga said.
“Samaiden’s long-term growth is well-supported by the National Energy Transition Roadmap (NETR) as announced by the government which sets an ambitious target of RE to make up 31% of total power generation capacity by 2025, and 70% by 2050.
“Also, businesses, driven by commercial reasons and ESG considerations, have voluntarily invested in solar energy generation assets following the recent hikes in electricity tariffs,” it added.
Notably, the research house pointed out Samaiden has emerged a major winner in the recent Corporate Green Power Programme (CGPP), securing a total capacity of 43.32 MWac for solar power generation.
“We believe the CGPP offers higher return compared to the LSS programme as the CGPP uses a willing-buyer willing-seller model with an estimated tariff rate of 25-28 sen/kWh.”
Currently, its outstanding order book stands at RM351 million which can keep it busy for at least over the next 18 months.
Kenanga continue to like the group for reasons including its bright outlook of the RE market in Malaysia and its strong market position, being the second largest solar EPCC contractor locally.
The risks to its call include the government dials back on its RE policy, project cost overrun and liabilities and escalating cost of inputs.
